Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 1 Real Time Operations Energy Settlements Business Requirements Settlements and Billing August 22, 2006

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 2 Agenda Relevant Charge Type Calculations Highlights of Business Requirements –Calculation Map –Calculation –Outstanding Issues or Assumptions

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 3 Charge Type Calculations Real-Time Energy Imbalance Payment or Charge at a Resource Node, Load Zone, or Hub (PR , PR , PR , PR (h)) Real-Time Energy Payment for DC-Tie Import (PR , PR (i)) Real-Time Payment for a Block Load Transfer Point (PR , PR (j)) Real-Time Energy Charge for DC Tie Export represented by the QSE under Oklaunion Exemption (PR , PR (k)) Real-Time Congestion Payment or Charge for Self-Schedules (PR 6.6.4, PR (l)) Base Point Deviation Charge for Over Generation (PR , PR (m)) Base Point Deviation Charge for Under Generation (PR , PR (m)) IRR Generation Resource Base Point Deviation Charge (PR , PR (m)) Base Point Deviation Payment (PR , PR (n)) Real-Time Revenue Neutrality Allocation (PR , PR (aa)) ERCOT System Administration Charge (PR , PR (rr))

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 4 Real-Time Energy Imbalance Payment or Charge (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 5 Real-Time Energy Imbalance Payment or Charge (2) Requirement IdFR 10 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the Real-Time Energy Imbalance Payment or Charge by QSE and a Resource Node Settlement Point for each 15-Minute Settlement Interval in the Operating Day. RTEIAMT_ _ =(-1) * RTSPP_ * { RTMG_ _ _ + (SSSK_ _ * ¼) + (DAEP_ _ * ¼) + (RTQQEP_ _ * ¼) - (SSSR_ _ * ¼) – (DAES_ _ * ¼) – (RTQQES_ _ * ¼)} Requirement IdFR 11 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the Real-Time Energy Imbalance Payment or Charge by QSE and a Load Zone Settlement Point for each 15-Minute Settlement Interval in the Operating Day. RTEIAMT_ _ =(-1) * RTSPP_ * { (SSSK_ _ * ¼) + (DAEP_ _ * ¼) + (RTQQEP_ _ * ¼) – (SSSR_ _ * ¼) – (DAES_ _ * ¼) – (RTQQES_ _ * ¼) – RTAML_ _ }

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 6 Real-Time Energy Imbalance Payment or Charge (3) Requirement IdFR 12 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the Real-Time Energy Imbalance Payment or Charge by QSE and a Hub Settlement Point for each 15-Minute Settlement Interval in the Operating Day. RTEIAMT_ _ =(-1) * RTSPP_ * { (SSSK_ _ * ¼) + (DAEP_ _ * ¼) + (RTQQEP_ _ * ¼) – (SSSR_ _ * ¼) – (DAES_ _ * ¼) – (RTQQES_ _ * ¼) } Requirement IdFR 13 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (3), PR (3), PR (3) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the total of RTEIAMT across all Settlement Points for each QSE and for each 15-Minute Interval in the Operating Day. RTEIAMTQSETOT_ =RTEIAMT_ _ Requirement IdFR 14 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the total of RTEIAMT across all QSEs and all Settlement Points for each 15-Minute Interval in the Operating Day. RTEIAMTTOT= RTEIAMTQSETOT_

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 7 Real-Time Energy Payment for DC-Tie Import (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 8 Real-Time Energy Payment for DC-Tie Import (2) Requirement IdFR33 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (1) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the RTDCIMPAMT for a QSE, DC Tie Settlement Point, Operating Day, and 15-minute interval. RTDCIMPAMT_ _ =(-1) * RTSPP_ * (RTDCIMP_ _ * ¼) Requirement IdFR34 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the total payment to a QSE for energy imported into the ERCOT System through all DC Tie Settlement Points, for the Operating Day and 15-minute interval. RTDCIMPAMTQSETOT_ =RTDCIMPAMT_ _ Requirement IdFR 35 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the total payment to of the RTDCIMPAMT payments for the Operating Day and 15-minute interval. RTDCIMPAMTTOT= RTDCIMPAMTQSETOT_ An NPRR is necessary to modify the terminology in PR to refer to RTDCIMPAMTTOT instead of RTBTBIMPATMTOT, in order to be consistent with PR

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 9 Real-Time Energy Payment for a BLT Point (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 10 Real-Time Energy Payment for a BLT Point (2) Requirement IdFR48 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (1) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the BLTRAMT for a QSE, Load Zone Settlement Point, and BLT Settlement Point for an Operating Day, and 15-minute Settlement Interval. BLTRAMT _ _ _ =(-1) * RTSPP_ * BLTR_ _ _ Where is the Load Zone Settlement Point where the load normally locates and the BLTP has been configured within the Settlement System. Requirement IdFR49 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the total of the payments to each QSE for energy delivered to ERCOT Loads through BLT Points for an Operating Day and 15- minute Settlement Interval. BLTRAMTQSETOT_ = BLTRAMT _ _ _ Where is the Load Zone Settlement Point where the load normally locates and the BLTP has been configured within the Settlement System. Requirement IdFR50 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the total of the payments for energy delivered into the ERCOT System through BLT Points for the Operating Day and 15- minute Settlement Interval. BLTRAMTTOT= BLTRAMTQSETOT_

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 11 Real-Time Energy Payment for DC-Tie Export (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 12 Real-Time Energy Payment for DC-Tie Export (2) Requirement IdFR63 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (1) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate RTDCEXPAMT for a QSE, DC Tie Settlement Point, Operating Day, and 15-minute interval. RTDCEXPAMT_ _ =RTSPP_ * (RTDCEXP_ _ * ¼) Requirement IdFR64 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the total of the RTDCEXPAMT charges to the QSE for the Operating Day and 15-minute interval. RTDCEXPAMTQSETOT_ =RTDCEXPAMT_ _ Requirement IdFR65 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the total of all RTDCEXPAMT charges to the market for the Operating Day and 15-minute interval. RTDCEXPAMTTOT= RTDCEXPAMTQSETOT_ An NPRR is necessary to modify the terminology in PR to refer to RTDCEXPAMTTOT instead of RTBTBEXPATMTOT, in order to be consistent with PR

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 13 RT Congestion Pmt or Chg for Self-Schedules (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 14 RT Congestion Pmt or Chg for Self-Schedules (2) Requirement IdFR78 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (1) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate RTCCAMT by QSE, Source and Sink Settlement Point pair, Operating Day, and 15-minute interval, for all QSEs with a Self-Schedule for the Source and Sink Settlement Point pair. RTCCAMT_ _ _ = (RTSPP_ - RTSPP_ ) * (SSQ_ _ _ * ¼) Requirement IdFR79 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the total RTCCAMT for a QSE, Operating Day, and 15-minute interval. RTCCAMTQSETOT _ =RTCCAMT_ _ _ Requirement IdFR80 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the total RTCCAMT to the market for the Operating Day and 15-minute interval. RTCCAMT_ _ =RTCCAMTQSETOT _ (NOTE: Change required to the requirements, to use the RTCCAMTQSETOT.)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 15 Base Point Deviation Charge

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 16 Base Point Deviation Charge Requirement IDFR92 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process MapsWill be completed August 31, 2006 Description The ERCOT Settlement system shall determine the resource type from the resource name within the AABP bill determinant. If the resource type is an Intermittent Renewable Resource (IRR) Generation Resource, then the ERCOT Settlement system shall perform the Calculation Process for IRR Generation Resources; otherwise the ERCOT Settlement system shall perform the Calculation Process for Generation Resources, Excluding IRRs. If AABP_ _ _ resource type = IRR Then Perform Calculation Process for IRR Generation Resources Otherwise Perform Calculation Process for Generation Resources, excluding IRR

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 17 Base Point Deviation Charge for IRRs Requirement IDFR93 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process MapsWill be completed August 31, 2006 Description For IRR Generation Resources: If AABP_ _ _ > (HSL_ _ _ – QIRR) Then BPDAMT_ _ _ =0 Otherwise BPDAMT_ _ _ =Max (0, RTSPP_ ) * Max (0, TWTG_ _ _ – ¼ * AABP_ _ _ * (1 + KIRR))

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 18 Base Point Deviation Charge excluding IRRs Requirement IDFR94 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process MapsWill be completed August 31, 2006 Description For all Generation Resources, except Intermittent Renewable Resources, the ERCOT Settlement system shall determine whether or not the Generation Resource over-generated or under-generated, on an interval by interval basis, as compared to the resource’s Base Point. If AABP_ _ _ > TWTG_ _ _ Then Perform Calculation Process for Generation Resources, excluding IRRs, for Over Generation. Otherwise Perform Calculation Process for Generation Resources, excluding IRRs, for Under Generation

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 19 Base Point Deviation Charge excluding IRRs for Over Generation Requirement IDFR95 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process MapsWill be completed August 31, 2006 Description BPDAMT_ _ _ =Max (0, RTSPP_ ) * Max [ 0, ( TWTG_ _ _ – ¼ * Max ( ((1 + K1) * AABP_ _ _ ), (AABP_ _ _ + Q1) ) )]

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 20 Base Point Deviation Charge excluding IRRs for Under Generation Requirement IDFR95 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process MapsWill be completed August 31, 2006 Description BPDAMT_ _ _ =Max (0, RTSPP_ ) * Min (1, KP) * Max [ 0, ( Min ( ((1 – K2) * ¼(AABP_ _ _ )), ¼ (AABP_ _ _ – Q2) ) – TWTG_ _ _ )]

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 21 Requirement IDFR105 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process MapsWill be completed August 31, 2006 Description LABPDAMT_ =(-1) * BPDAMTTOT_ * LRS_ Requirement IDFR106 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process MapsWill be completed August 31, 2006 Description BPDAMTTOT= BPDAMTQSETOT_ Requirement IDFR107 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process MapsWill be completed August 31, 2006 Description BPDAMTQSETOT_ = BPDAMT_ _ _ Base Point Deviation Payment

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 22 Real-Time Revenue Neutrality Allocation (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 23 Real-Time Revenue Neutrality Allocation (2) Requirement IdFR114 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR (2) Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the RT Revenue Neutrality Allocation by QSE for each 15-minute interval in the Operating Day. LARTRNAMT_ = (-1) * (RTEIAMTTOT + BLTRAMTTOT + RTDCIMPAMTTOT + RTDCEXPAMTTOT + RTCCAMTTOT + RMRDAESRTVTOT + RTOBLAMTTOT / 4 + RTOPTAMTTOT / 4 + RTOPTRAMTTOT /4) * LRS q (NPRR change required: Modify the terminology in PR to refer to RTDCIMPAMTTOT and RTDCEXPAMTTOT instead of RTBTBEXPAMTTOT and RTBTBEXPAMTTOT in order to be consistent with PR and PR ) There are “cleanup” issues in – an NPRR is necessary in order to correct some of the textual description as well as the variable definitions table.

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 24 ERCOT System Administration Charge (1)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 25 ERCOT System Administration Charge (2) Requirement IdFR132 Source Mapping (Protocol/NERC/FERC and other binding documents Ref #)PR Traceability to Sub-Process MapsWill be completed August 31, 2006 Description: Calculate the ERCOT System Administration Charge by QSE and Operating Day for a 15-minute interval. ESACAMT_ =LAFF * ( RTAML_ _ ) (NPRR change required: Modify so that the equation sums the RTAML across Settlement Points before applying the Load Administration Fee Factor.)

Texas Nodal © Electric Reliability Council of Texas, Inc. All rights reserved. 26 Summary The following Protocol versions were used as the basis of the RT Energy Settlements requirements: –Nodal Protocols Section 6 (NPRR 009 approved by TAC on 08/03/2006) –Nodal Protocols Section 9 (NPRR 007 approved by the Board on 07/18/2006).